More than eighteen months after the Great Panic began, more than a year after Bear Stearns was rescued, more than six months after Lehman collapsed and AIG became a ward of the state, more than a hundred days into the Obama presidency, it was still not entirely clear that Ben Bernanke and his allies at the U.S. Treasury, Hank Paulson and then Tim Geithner, had succeeded at preventing what Bernanke called Depression 2.0. Given all that the Fed and the rest of the government had done, this fact alone was stark testimony to the severity of the financial crisis that provoked what the International Monetary Fund declared to be “by far the deepest global recession since the Great Depression.” After all, the Bernanke Fed had not repeated the mistakes of the 1920s and 1930s; it had been neither passive nor stingy with credit. The Fed had decided to do whatever it takes. It had cut interest rates from 5.25 percent to 3 percent by the end of January 2008 and then to zero in December 2008, and promised to keep them there for a long time.
